Construction falters when empty nest refills

Post-teens living at home dent SD economy

If you want to help the local economy, shoo those in their 20s out of the family home. That's the unstated message of a study by Kelly Cunningham of the National University System Institute for Policy Research.

One thing dragging down the San Diego economy is the historically low household formation, says Cunningham. This dents the construction, finance, insurance, and real estate industries.

In recent years, more young people in their 20s cannot afford to move out of the family home because they are burdened by college debt and can't find a decent-paying job. Similarly, families and individuals doubling up (occupying the same home) holds down the homebuilding industry, which has historically been integral to the county's economy.

During the Great Recession and its weak aftermath, San Diego's average household size rose to 2.8, up from the historic level of 2.7, explains Cunningham. Because of this rise in average household size, for every population increase of 1000, the region needs 130 fewer homes than if the level were at the typical 2.7.

Prior to the Great Recession, there were more than 90,000 people employed in construction; that was down to 64,200 in April of this year. Similarly, at the peak, 84,000 were employed in finance, insurance, and real estate; in April, that number was down to 66,800.

The metro area's population has grown by 129,926 since the Great Recession, an increase of 4.2 percent. But household formations have only grown 1.7 percent. So, those working in industries related to housing are finding it harder to get jobs.

Comments

I think dum Cunningham should stop with that stupid study. People should know/learn to save money for a down payment if they want to buy/own, doesn't matter where they are, renting ... I know 2 ways of thinking about it .. Parents keeping what they have (especially if they have real estate that increases in value) to hand down to give thier heirs an advantage after parents are gone Or parents feeling like they are entitled to spend everything they have made on themselves. There is no fits all answer because what a family values is variant. But Don, I would never push my kid out in this economy (and after being so glad school shootings didn't get to campus). Don't give a damn about who else wants money from (college kids) F the local economy - parents need to be willing to help their kids as long as it takes.

A harsh indictment of the city and county is to describe them as becoming progressively more "third world." Going back to the 40's, and probably before, the ideal was that when young folks finished school and went to work (and married) they would set up a household. And part of that ideal was that it would soon include home ownership. But that was the US. The rest of the world was very accustomed to multi-generational living, and still does it. Many ethnic groups that now reside here tend to live that way, even though it may not be "necessary." They do it that way because it is what is preferred. However, having said all that, it should be noted that home prices are very high here while salaries lag. The barriers to new home construction now push the builders into constructing McMansions, not starter homes, as was the case forty years ago. Young people just starting out cannot afford those 4000 square foot homes with three garages that sell far on the high side of a half-million bucks. Until things change, and I doubt that they will, this trend will continue and intensify. Oh, there is now a market for apartments, and plans are going forward to build thousands of them. One new complex is located close by Palomar College in San Marcos, and it is also convenient to Cal State, San Marcos. But they won't be cheap at all.

Visduh: Another demographic factor pushing the housing market is divorce. It creates a need for two residences (apartments or owned homes) when pre-divorce there was only one. San Diego's housing market today is pushed by outside speculators. Best, Don Bauder

A few years ago, Development Services and the Planning Commission gave realtors and developers what they had long wanted: a code change to land use regs that allows uninhibited addition of 700-sf second units on single-family-zoned lots.

Second units are now being built in backyards of lots all over South Park, increasing density without zoning changes. Small homes built in the early 1900s are often torn down, except for one wall, and rebuilt at twice the original square feet, with detached or attached "companion units." FAR variances seem to be freely given.

The second units theoretically house family members (the favored PR name for them is "granny" flats), but they are almost always used as rentals. Realtors promote them by suggesting that buyers can afford expensive mortgages by renting the second unit.

The local realtors, builders, insurers, and mortgage lenders waged war on former Mayor Dick Murphy when he wouldn't approve the changes that DSD and the Planning Commission have now enacted (revision to Section 141.032). Under Jerry Sanders, the changes were made almost secretly. The changes and ultimate code revision were purposefully discussed not at all, or only in the vaguest way, at the Community Plan Update meetings in the past few years. When the revision was mentioned, the major response of neighborhood property owners was very negative.

Any dents in the industries involved in building, selling, financing, and insuring are self-inflicted. They wanted to cram more bodies on existing lots. Jerry Sanders gave them what they wanted.

May we assume that you don't favor this "densification"? What you describe was done in the LA area as far back as the 1920's. In fact it was typical in Santa Monica forty to fifty years ago, with beach cottages that had a second unit behind the original unit. I was of mixed emotions about it then, and still am.

Visduh, what offends me is the stealth involved. Of course, for anyone who continually checked the city website postings, the changes to the land use code were visible. But at the Greater Golden Hill Community Plan Update meetings, local residents who are also City employees were purposefully assigned to tables in order to squelch discussion of granny flats. I saw it with my own eyes.

I'm not de facto opposed to allowing someone to build a 700-sf living unit in their back yard on a 5000-sf lot. I'd like a studio space added to my house, for my own use, or as a guest house, if I were willing to give up greenery and trees. My observations throughout South Park, however, are that this is mainly being done with tear-downs and rebuilds, and that the purpose is not to provide extra living space for a homeowner, but to provide rental income. That said, getting back to Mr. Bauder's report, some of the renters are adult children or relatives of owners. The companion units I see in my neighborhood have the 50-something "granny and gramps" owning and living in the main house and the 30-something (sometimes divorced) kid renting the granny flat. May I add that the grown kids have degrees in web design, or internet marketing. Sad!!!

As long as the granny flat occupants have off-street parking, and don't practice/play in a loud band (some do!), the impact of their presence isn't too obvious.

What we do lose is trees and a feeling of openness and privacy, and what the insurers note is increased density. Higher fire and liability insurance rates result, as areas get rezoned by the insurance companies.

Blue South Park: Both Sanders and Susan Golding turned San Diego government into a welfare state for real estate developers. The city was there already, but the trend intensified under those mayors. Best, Don Bauder

They ought to consider safety of residents. They spread out so much there's no way to protect homes from raging wildfires. 2003, 2007 each had approx 20 fatalities. I remember being at home watching TV news and understanding they let it burn for days without much intervention. How many homes went down this time? Wouldn't you think that was a prior consideration not afterthought when they get around to disaster preparedness? So much school cash has been stolen (Sweetwater) they could have used to update protective measures, much needed campus security, cameras. Gun advocates don't think we have a problem but here in the big city can you ever feel really safe outside anymore? Do we need more cramped-space apartment communities, or like Visduh implies, smaller more affordable houses? Sort of related, Dr. Oz had a segment explaining that chicken will soon be raised in the US, then sent to China for processing and brought back. China is responsible for killing hundreds of pets here with their tainted pet food. And don't we need those jobs anyway? Out of control. Somebody at a University wanted to impress himself with his writing a paper, the only place it sounds good. Our leaders are idiots. Also, if people are having less children now, that's progress.

Butterball brand turkeys are processed in China. It's a lot cheaper to process the turkey in China and not have to pay for sanitation or health inspectors. George Bush II made this possible. One of his first acts as President was to repeal federal regulations that required food processors to disclose the country of origin on food packaging. Do you like to eat pickles? Pickles are made in either Vietnam or India with the country of origin missing from the label. Some food processors try to fool consumers by claiming the food "is packed in the USA." That means they import the food from China in 50 gallon oil drums and can it in the US. I don't eat anything if it is not grown or made in the US. I don't eat in restaurants because I don't know where the food comes from. I verify the origin of the food before I buy it by writing to the food processor and asking for confirmation.

Burwell: I congratulate you for your caution. Of course, something grown or made in the U.S. can be contaminated, too. The Bush administration cut back on food inspection. There have been several scandals over meat and vegetables coming from our own country. Best, Don Bauder

Are you sure that Butterball brand turkeys are processed in China?
As of a couple of years ago, when they closed the plant in Don's neck of the woods, Longmont, they still had plants in Arkansas, Missouri, Illinois and North Carolina. I believe the plant in Mt. Olive, is the largest turkey-processing plant in the world. In one of their press releases a yr and a half or so ago, during the whole turkey cruelty flap, pun intended, I believed they claimed that Butterball LLC processed more turkey than any other company in the country, something like a billion pounds a year

San Diego employers don't want to hire post-teens for entry level jobs except of the most menial category. For example, if employers want to hire computer support technicians to maintain computer networks, employers will not interview recent SDSU graduates for positions to avoid training costs. Employers recruit transplants from outside the area (usually from Michigan) who already have experience. That's why the population continues to swell while many post-teens who were born and raised here cannot find good jobs despite having degrees from SDSU and UCSD. The only chance these post-teens have of obtaining a decent job is to join the military and obtain hiring preferences for employment with the federal government. There are more federal jobs that require college degrees than there are veterans with college degrees to fill them.

Burwell: This is a lamentable situation. Remember, too, that large employers like Qualcomm bring in foreigners -- mostly from India -- to do electronic work for low pay that pushes down the pay levels of all the STEM workers.

You have to wonder about some transplants from Michigan. They are coming from areas with a low cost-of-living to San Diego, which has one of the nation's highest. How do they buy homes? Or don't they? Best, Don Bauder

Ellen Hansen Corby, an American actress most known for her role as Grandma Esther Walton, but I didn't watch that show. A lot of different lifestyles to get used to here. Taller and taller buildings is one of them. Wouldn't be my choice, especially going to ruin the cozy town atmosphere in Ocean Beach. But I believe most is rental and they will be able to get what they want.